Which description best captures SWOT analysis?

• A. External opportunities and internal weaknesses
• B. Internal strengths and external threats
• C. Internal opportunities and external threats
• D. Internal strengths and weaknesses, and external opportunities and threats

Answer: (D)

SWOT analysis is a planning tool that looks at what a company can control internally (strengths and weaknesses) and what exists in the external environment (opportunities and threats). The best description includes all four areas: internal strengths, internal weaknesses, external opportunities, and external threats. This combination helps you leverage strengths to seize opportunities, address weaknesses to defend against threats, and craft strategies that fit the company’s capabilities with what’s happening outside.

For example, a business with a skilled workforce (strength) but limited cash (weakness) might pursue a growing market (opportunity) while watching out for new competitors (threat). Seeing all four areas together guides decisions on where to invest, what to improve, and which markets to enter.